Colorado is getting a FAIR Plan in 2025. Here’s what that means for homeowners
Wildfires have long been part of Colorado’s history, but as these disasters become more frequent and severe, homeowners are facing new obstacles — especially when it comes to securing affordable insurance. The rising risk is driving up home insurance costs, and many major insurers are retreating from high-risk areas, leaving property owners scrambling for coverage.
The financial strain on the insurance market is clear. In 2023, Colorado property owners paid $4.58 billion in premiums, yet insurers faced $4.81 billion in claim payouts — resulting in a 115 percent loss ratio. In simple terms, for every $1 in premiums collected, insurers lost $1.15.
To address these challenges, Colorado is following in the footsteps of several other high-risk states and introducing a FAIR Plan in 2025. Slated to begin accepting applications by the end of the first quarter of this year, the program provides a much-needed safety net for homeowners shut out of the private market. It also underscores a growing reality — states facing increasing extreme weather are seeing their traditional home insurance markets pushed to the brink.
What is the Colorado FAIR Plan?
As of January 2025, the average home insurance premium in Colorado is $3,017 per year— 38 percent higher than the national average of $2,181. In wildfire-prone areas, rates can climb even higher, and some homeowners may be denied private coverage altogether. In Colorado Springs, the average premium is $3,254 per year.
The Colorado FAIR (Fair Access to Insurance Requirements) Plan is a state-backed insurance program designed for homeowners who struggle to find coverage through standard private insurers. Rising wildfire risks and a tightening insurance market have made it harder for some property owners to secure financial protection, and the FAIR Plan serves as a last-resort option for those deemed too high-risk by private carriers.
This plan offers basic coverage for damage caused by fire, windstorms and other perils. However, policies tend to be more expensive than standard home insurance and often come with limited coverage. Licensed producers in the state can write FAIR Plan policies for customers who meet eligibility requirements. If the program is ever unable to meet its financial obligations, like in the event of a widespread loss, it can collect fees from member insurers. These member insurers are also allowed to recoup fees directly from policyholders, potentially further increasing costs from participating homeowners.
Who is eligible?
To qualify for Colorado’s FAIR Plan, applicants must meet the following requirements:
- Proof of uninsurability: Homeowners must provide documentation showing that standard carriers have deemed their property uninsurable due to factors like wildfire exposure, severe hail risk, past claims, location concerns or the home’s age.
- Rejection from multiple insurers: Applicants need proof that at least three different insurance companies licensed in Colorado have declined to cover their property.
- Work with a licensed insurance professional: A qualified agent must verify eligibility and assist with the application process.
Even if you’re eligible, the FAIR Plan has coverage limits. It caps coverage at $750,000 for homes and $5 million for commercial properties, with policies based on actual cash value (ACV) rather than replacement cost.
One more thing to keep in mind. While the FAIR Plan can financially protect against fire and other covered risks, it does not include coverage for water damage, building code upgrades or other exclusions common in high-risk policies. Additionally, premiums will likely be higher than those on the standard market — a trade-off for insuring properties that carry elevated risks.
How to apply
Applying for coverage through Colorado’s FAIR Plan requires working with a licensed insurance agent. Your agent will guide you through the application, ensuring all required documents are included, particularly the rejection letters needed to demonstrate eligibility for the program.
Before committing to the FAIR Plan, it may be worth thoroughly exploring options in the traditional insurance market. Given its higher premiums and limited coverage, the FAIR Plan is considered a last resort rather than a primary choice for homeowners.
Compare home insurance rates
Answer a few questions to see personalized rates from top carriers.
Powered by Coverage.com (NPN: 19966249)
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
What does this mean for the Colorado home insurance market?
The Colorado FAIR Plan is stepping in as a resource for homeowners who’ve run out of options with traditional insurers. But its arrival also highlights a bigger issue: the insurance industry’s growing reluctance to cover high-risk properties. As private insurers pull back, narrowing their coverage options or stepping away from fire-prone areas altogether, even more homeowners will have no choice but to turn to the FAIR Plan.
While the Colorado FAIR Plan helps address the insurance availability issue throughout the state, it also underscores the growing wildfire risk. In my neighborhood, most of our neighbors whose homes back up against the woods were dropped by their longtime carriers due to the high fire risk. These were folks who had lived here for years and who hadn't needed to think twice about their insurance policies until recently.— Natalie Todoroff, Bankrate insurance analyst
For many, this is a wake-up call. The FAIR Plan is a backup option — but one with serious financial trade-offs. Higher costs and limited coverage mean homeowners might be paying more while getting less. And with insurance carriers continually adjusting to Colorado’s wildfire risks, those costs are likely not expected to level out anytime soon. Additionally, FAIR Plans can become overwhelmed in the event of catastrophic losses, like the recent Los Angeles wildfires.
As the first state FAIR Plan launched in several decades, we will likely see more amendments to the plan’s policies moving forward. The FAIR Plan Association is required to submit a report with the state’s insurance commissioner each year detailing the number of claims and policies that year along with a financial status report. The Colorado Department of Insurance will likely need to continue to adjust regulations to ensure the program remains solvent and attempt to avoid a situation like that of Florida, where the insurer of last resort now makes up the majority of the state’s home insurance market.
Homeowners with private coverage will see no direct impact to their policies or rates as a result of the FAIR Plan, but if member insurers are subjected to fees to increase FAIR Plan funding, this could trickle down to policyholders in the form of increased premiums.
You may also like
What happens if you lie on your life insurance application?
How much life insurance do I need?
Allstate, Geico, Progressive and State Farm compared
What is a flood elevation certificate?